WTO Members Review Preferences Granted to LDCs’
Service Suppliers
A dedicated session of the WTO Services Council, held on 29-30
October 2019, reviewed how WTO members are making use of the Services Waiver that
allows them to grant more favourable treatment to service
suppliers from least-developed countries (LDCs). Members also discussed transparency
issues and cybersecurity measures in a regular meeting of the Services Council on
30 October.
The dedicated
session on the WTO Services Waiver consisted of a workshop and a formal meeting
of the Council for Trade in Services. The workshop provided an opportunity to “focus
our attention on the task of better integrating LDCs into international services
trade” and of “making the trading system more inclusive”, Director-General Roberto
Azevêdo said in his opening remarks on 29
October. A total of 36 WTO members are
classified as LDCs.
The workshop
reviewed ways of increasing LDCs' services exports, including through maximizing
the use of the preferences available, and the challenges lying ahead.
The participants
noted that LDCs account for 1% of world services and only 0.3% of world services
exports. LDCs' exports are expanding rapidly — 11% per year on average — but from
a low base. Bangladesh is the leading LDC services exporter, followed by Cambodia
and Myanmar, and tourism is the LDCs' most traded services sector. To date, 51 WTO
members — both developed and developing countries — have notified preferences under
the Services Waiver. These members together account for 86% of global GDP and 86%
of global trade.
A review
of the waiver was mandated by the 2015 Nairobi Decision. A services
waiver was first established in 2011 allowing
WTO members to grant more favourable treatment to LDC
service suppliers. The Nairobi Decision extended the waiver until 31 December 2030.
The purpose of the waiver is to enhance the participation of the world's poorest
countries in world trade.
One theme
emerging from the dedicated session of the Services Council was the need for more
detailed trade data and for reporting of bilateral trade flows. The European Union
was cited as one of the few members to report on the evolution of its imports of
LDC services. It was noted that Bangladesh was one of the few LDCs to publish data
about its services exports. The EU was reported as being the top destination for
Bangladesh's services exports.
Lesotho
said that services trade is key for LDCs' economic expansion, including for diversification,
job creation and industrial development. It called for increased awareness about
LDC exports among consumers in preference-granting economies. Senegal announced
the creation of a national dedicated working group to monitor the progress made
on implementing the waiver and said the conclusions will be shared shortly.
The LDCs
also drew attention to the potentially restrictive effect regulations can have on
market access for LDC service suppliers, including raising the costs of trade. They
called on preference-granting members to tailor their preferences to the collective request tabled
by the LDCs in 2014, which calls for, among other things, to end requirements for
the recognition of qualifications and market access restrictions, including residence
obligation for professionals from LDCs. Strategies on strengthening national capacities
for service supply should be tailor-made to respond to the specific capacity constraints
LDCs are facing, the group said.
In addition,
an overview of the recent improvements to the services-related statistics databases
was presented, including the TiVA database
— developed by the Organisation for Economic Cooperation
and Development (OECD) and the WTO — that measures trade in value
added (TiVA) terms, and the Trade in Services database by mode of supply, which
measures services trade by sector.
The dedicated
session highlighted the need for efforts from national agencies in charge of statistics
for financial resources to collect and compile data and to promote multi-level cooperation.
The need for specific technical assistance for
LDCs was also emphasized. Improving data collection at the national, regional and
international levels will be essential to better capture the progress made on implementing
the Services Waiver.
Another
issue highlighted was the regional disparity among LDCs. For example, tourism services
are concentrated mainly in Asian countries, and while the share of LDCs' services
exports is growing in Asia, it has been declining in Africa since 2005.
The preference-granting
members shared recent initiatives and practices to translate the waiver into concrete
market share for LDCs. These include easing the granting of visas for service suppliers
seeking to access foreign markets, assisting LDCs in building a robust and sustainable
tourism sector by helping to build roads and hotels and enhancing presence on the
Internet, organizing traineeships and organizing targeted technical assistance activities.
It was also stressed that the waiver should complement other efforts.
Several
LDC service suppliers presented their success stories, the challenges they face
and made suggestions on how to facilitate their further integration into the global
trading system. It was said that certification remains a key challenge for service
suppliers from LDCs, especially given its close link with consumer confidence.
LDCs
called on members to grant additional preferences and to reduce regulatory barriers.
In a
meeting of the Council for Trade in Services on 30 October, WTO members discussed
transparency and notification requirements for services-related measures following
a communication sponsored by several developing countries. All members that intervened
said that they shared the proponents' objective to improve transparency, although
many noted the capacity constraints faced by developing countries and LDCs in complying
with notification requirements, including internal coordination challenges. Several
indicated that they were ready to engage in a conversation on how the transparency
of services trade measures could be improved.
Japan
and the United States reiterated concerns with cybersecurity measures from Viet
Nam and China, warning against their potentially restrictive impact on foreign enterprises
and inconsistency with the obligations of the WTO's General Agreement on
Trade in Services (GATS). These concerns were shared by Australia,
Canada, the EU, New Zealand and Chinese Taipei.
While
strongly supportive of efforts to enhance cybersecurity and understanding the need
to ensure compliance with other domestic laws, these members expressed concerns
with measures that require local storage of information and/or limitations to its
transfer abroad. The members called on China and Viet Nam to adopt less trade-restrictive
measures to pursue these legitimate goals. The US referred in particular to a workshop
organised by the Asia Pacific Economic Cooperation (APEC) on
cybersecurity standards, demonstrating how the alignment of these standards provided
an opportunity to increase trade and strengthen overall cybersecurity in the region.
China
and Viet Nam were requested to take comments from all stakeholders into consideration
before implementing draft measures. While their efforts to enhance transparency
and engage with interested members were acknowledged, the lack of clarity and concerns
about certain requirements were cited.
China
announced that its encryption law, which will come into force next year, reflects
the comments received from different stakeholders during the consultation phase
with a view to keeping a balance between guaranteeing encryption security and minimizing
the burden for business. It reiterated its availability to discuss this matter.
Viet
Nam explained that the legislative process is transparent and takes into consideration
comments from all stakeholders.
Under
discussion at a meeting of the Committee on Specific Commitments on 28 October was
a proposal from the Kyrgyz Republic about how members could improve their commitments related
to the temporary movement of individuals, also known as “mode 4”. The
proposal was first discussed earlier in 2019. The
Kyrgyz Republic reiterated that many members' mode 4 entries are ambiguous and opaque,
leading to legal uncertainty and thus undermining the value of specific commitments.
Some common problems relate to economic needs tests — (a test that conditions market
access upon the fulfilment of certain economic criteria, also known as “ENT”) and
the categories of individuals concerned, the delegation said.
Many
members that spoke agreed with the need to have clearer and more transparent mode
4 commitments, particularly with regards to ENTs and defining categories of individuals.
However, several members said that some of the issues raised, including setting
common definitions for categories of individuals, would pose a challenge. The chairperson,
Mr Tamas Vattai from Hungary, said he would continue consultations with
members on how the Committee should move forward under this agenda item.
At a
meeting of the Committee on Trade in Financial Services (CTFS) held on 28 October,
WTO members broadly supported a proposal by China to hold a thematic seminar on
“FinTech: Trade, Financial Inclusion and Development”
The Chairperson, Mr Ding Li of China, will hold consultations
with all interested members to shape the seminar's programme.
The CTFS is one of the subsidiary bodies of
the Services Council.